Colorado’s medical pot business is for-profit, regulated – And thriving

colorado-pot
Ryan Milligan tends cannabis plants in a state-monitored Denver facility that supplies four Greenwerkz stores with medical marijuana.

By Peter Hecht
The Sacramento Bee

DENVER – After 15 years as a white-collar “corporate nomad,” Dan Rogers found his new career in the thriving green-collar industry of Colorado, the only state in America with a for-profit medical marijuana market.

The equities trader and former investment banker now produces pot breeds “Reclining Buddha” and “Heartland Cream” in a converted printing press warehouse near downtown Denver.

In the nation’s most heavily regulated medical cannabis industry, he also works under constant video surveillance.

Electronic eyes, required by Colorado’s year-old Medical Marijuana Enforcement Division, track packaging of each shipment from Rogers’ warehouse to his four marijuana stores, called Greenwerkz.

He submits product manifests and delivery routes for state approval. Still more cameras are recording as marijuana is unpacked and his state- licensed employees sell to state-registered patients.

“Everything from seed to sales is on video,” Rogers said. “You need to know where every gram goes, where every plant is.”

In Colorado, America’s second-largest medical marijuana market behind California, marijuana capitalism flourishes under strict regulations approved by the state Legislature starting last year.

In California, dispensaries handling millions of dollars in transactions are supposed to operate as nonprofits – with medical marijuana users giving “donations” to “reimburse” operators and growers for costs.

Colorado stores simply pocket cash as profit. And, under new mandates that stores grow at least 70 percent of the marijuana they sell, weed industrialization is flourishing. It is happening despite U.S. Justice Department warnings over attempted large-scale cultivation in California or suspected medical pot profiteering in other states.

In Denver, the marijuana boom grows in old brick buildings and shuttered factories that only five years ago were being converted into artist lofts and live-work spaces for urban professionals.

A former truck and tractor parts factory now houses indoor farms for eight marijuana stores. Elsewhere, real estate broker John Wickens has leased a half-million square feet of space to medical pot entrepreneurs – including a 76,000-square-foot cultivation room for one store.

“This has helped the city tremendously,” he said. “It steadied commercial real estate. There are buildings with 40,000 square feet sitting empty. Who else is going to take it?”

Denver interim city attorney David Broadwell said the city took in $3.5 million in marijuana sales taxes last year and hundreds of thousands in local licensing fees from 300 marijuana stores and other cannabis businesses. Colorado’s medical pot market may be one-sixth of California’s, yet Broadwell said Colorado’s cannabis capitalism took the Golden State model “and put it on steroids.”

The industry worries Tom Raynes, a former deputy state attorney general and local prosecutor who heads the Colorado District Attorneys’ Council. He says Colorado pot businesses operate as an “assumption-of-risk industry” – doomed to collapse if the U.S. Justice Department, which considers all marijuana illegal, decides to intervene.

“I think they’re inviting the federal battle,” he said. “They’re poking the tiger.”

But Tom Massey, a Republican state representative from central Colorado who co-sponsored legislation regulating the industry, holds Colorado up as a national model, one that eased federal concerns by providing meticulous oversight to prevent diversion of medical marijuana to the illegal market.

“I think the feds are thinking that as long as we keep it for its intended use, they’re going to turn a blind eye,” he said.

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